By Frank J. Diekmann
Stop me if you’ve heard this one before: All Americans hate banks and love credit unions, and the only real mystery is why it’s taking so long for all 319 million Americans to leave those hated B words and make the move to a CU. Traffic maybe?
James Marshall poked a few holes in that narrative assumption.
Speaking to the Hawaii league’s annual meeting over the weekend, Marshall noted that for all that talk of Millennials being especially unfriended by those for-profit, Wall Street banks, research shows Millennials actually are the demo with the highest level of satisfaction with banks. Of course with this same group “loyalty” can be as fleeting as the next killer app.
“People may ‘hate’ their bank, but they also trust their bank,” observed Marshall, manager of Filene’s Cooperative Trust program, which is better known as the “Crashers.” Sixty-seven percent of Americans are saying positive things about banks.”
Marshall told the Hawaiian credit unions meeting at the Hilton Waikoloa that he doesn’t blame them for having a false impression of Americans’ attitudes toward banks. It’s the same reason the clerk at the DMV is sour on mankind’s inherent goodness: CUs only interact with the unhappy control group.
Those most dissatisfied with banks come to a credit union and sign up, but only after venting about their former financial. Those stories become anecdotes and filter up through the management ranks until they become never-challenged assumptions in the business.
When it comes to the much-discussed “mission” issue, Marshall said for most banks and credit unions the mission isn’t all that different, and for both types of institutions it frequently revolves around the concept of being a part of and giving back to the “community.” But there’s another narrative challenged by what institutions say and believe and what consumers actually do.
“Only one-in-four Americans care about what a financial institution is doing in the community as an influencer of their decision (on where to take their business),” said Marshall.
Reviewing some other research conducted by Filene Research Institute, parent to the Cooperative Trust, Marshall noted credit unions are “terrible at telling their story,” but then added, “the fascinating thing is banks don’t really have one.”
That story is one that likely needs to begin with a simple prologue explaining what this whole financial co-op thing is about. For instance, other research found that “36% of Millennials don’t have a clue what a credit union is. Similarly, in that same research, when asked “Are you eligible to open a checking account at a credit union?” 29% said no and 27% said they had “no idea.”
Marshall noted that in some recent work he has been doing he interviewed 21 people about the differences between banks and credit unions, and 20 of those people could not provide a response. And the 21st person, who knew some of the differences, repeatedly used the word “allegedly” before naming any of the positive CU attributes.
An Inside Job That Needs Some Work
One big weakness for credit unions, and one I agree with and have written about before, is credit union employees. When new employees are hired in CUs they get a heavy dose of policies and procedures and training. “We need to tell new employees what to do, but we also need to add a ‘why,’” observed Marshall.
Marshall ran through a number of other research findings that for credit unions will be bewildering and troubling, with consumers, and especially Millennials, often attributing positive attributes about CUs, such as better pricing, to banks.
Meanwhile, when it comes to Millennials’ own finances, Marshall called the group “very over-confident about money, but also very under-equipped and uninformed.”
“It all comes back to the ‘why’ we do it,” he continued, urging CUs to “be what Millennials need in a way that only a credit union can.”
(And P.S.: A quick thanks to the Hawaii league for having me as a speaker, and for providing these sunsets, below)
Frank J. Diekmann is Cooperator in Chief at CUToday.info and can be reached at Frank@CUToday.info or @FrankCUToday.